“This post originally appeared on OPEN Forum, an online community providing small business owners with information and advice to help them do more business.”

You know what makes you tick. Having your own business is all the motivation you need every day to get up and get the job done. But what motivates your employees so that they'll share your enthusiasm for the company? If you're a small-business owner, you've likely wondered—more than once—what kind of employee incentive programs work?

Incentives Big and Small

"The most common mistake is thinking that rewards or employee incentive programs must be complex or costly," says Heath Suddleson, speaker and author at Executive Achievement. "Employee incentive programs that work should be simple enough to explain in three sentences or less, and inexpensive enough that they can be done continuously."

Suddleson says he has examined the incentive programs companies use ranging from immediate performance bonuses to treats of M&M candies. "Cash bonuses are nice, of course," he says. "But the M&Ms proved that people will work for peanuts, especially when coated in a colorful candy shell."

According to Suddleson, the employee incentive programs that work best are the ones when the prize is distributed across the board. "Reward all who accomplish and not just who does the most," he says.

That's the way the commissions work at Absolute Automation, a company that sells automated home safety products. Every employee receives a percentage of the company's gross revenue.

"We found this worked better than having the commissions based on each individual salesperson's sales as some people may resent their working hours, which are spent doing other tasks such as working on the website or packing orders," says Nathan McBride, who works in sales and technical support for the company. "With this system, everyone wins as long as the company is performing well, which is, of course, the result of many ongoing jobs, not simply taking sales calls."

That same kind of incentive program is in place at Van Iwaarden Associates, an actuarial firm that designs retirement plans for companies.

"We contribute a large fixed-percentage of each year's profits to a bonus and sharing pool," says Jim van Iwaarden, consulting actuary for the firm. "Our whole team has a strong incentive to be efficient, productive and successful."

Van Iwaarden says with that incentive model, every employee is paid by the hour and is afforded a completely flexible schedule.

"As long as you can meet our client's needs you may work when you like, where you like and as much as you like," van Iwaarden says.

Employee Incentive Programs Beyond Bonuses

Employee incentive programs that work don't always have to be tied to commissions or bonuses.

That's why Taro Fukuyama founded AnyPerk, a platform that allows businesses of any size to offer employees perks. AnyPerk partners with its vendors to allow members access to discounts.

"We provide a solution for small-business owners to motivate, engage and reward their employees," Fukuyama says. "We provide high-quality perks such as discounts on cell phones, movie tickets and fitness to small companies, the discounts usually only larger corporations can provide, by aggregating all the small- and medium-sized companies."

AnyPerk is an affordable option in incentive programs because it only costs an employer $5 a month for each employee to have access to the discounts. Fukuyama says it's a low-cost option for smaller businesses looking to offer a competitive incentive program.

"Small companies recruit good talent from big companies and the employees are used to the high-quality perks of the large corporations," Fukuyama says. "We have many successful stories of small companies that have successfully recruited and retained good talent by having high-quality perks just like the large companies do."

At iOpeningMarketing, chief marketing officer Kat McCall has struck a deal that keeps her motivated—and it has nothing to do with money.

"We are a very small marketing firm," McCall says. "It is growing quickly, but we can't pay out commissions on new client business development, so I asked my boss if I could work from home one day for each new client attained and five days for each retained client. She said 'yes.'"

Employee incentive programs that work will vary from business to business. Make sure you consider your business's financial situation and your employees' lifestyle and habits before deciding on an incentive program that works for you.

Photo: iStockphoto

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